Thursday, September 9, 2004
Issue Contents:
| 09:05 | The Day Ahead Economic releases and news. |
| 09:26 | Swing Trade Setups From Wednesday's scan results. |
| 10:19 | Ivan Update Track forecast. |
| 14:28 | Quick Take: Oil Our basket of oil sector picks did well. |
| 16:15 | TrendVue Trader Talk Today's transcript. |
| 16:36 | Stock Scanner Results for Thursday September 9 |
| 17:47 | Shifting West Good for Florida... |
Good morning.
Currency affecting news this week includes yesterday’s rate hike in Canada, followed by this morning’s decision by the Bank of England1 to hold their benchmark rate unchanged.
Ivan has proven to be a deadly storm, a “rare” and “extremely dangerous” Category 5, the strongest storm as measured by the five-step Saffir-Simpson scale2; the Florida Keys are now under evacuation order as a precaution; storm trackers are starting to believe the storm may track into the oil-producing (more than 25% of US production) Gulf of Mexico area3.
Overnight a car bomb exploded outside the Australian embassy in Jakarta, Indonesia4, killing 11 and bringing back sharp memories of the 2002 bombing in Bali. Jakarta and Indonesia also happens to be a base of local operations for a number of international oil & gas exploration companies including Conoco and Talisman.
Government oil inventory reports are likely to be closely watched (10:30 am) this morning given the on-going geopolitical and weather concerns.
US Market Calendar
- 7:00 am: Bank of England Rate Policy Announcement1
- 8:30 am: Import and Export Prices (+0.4%)
- 8:30 am: Jobless Claims (-44,000 to 319,000)
- 10:00 am: Wholesale Trade
- 11:00 am: 3-Month, 6-Month Bill Announcement
- 1:00 pm: 10-Year Note Auction
- 4:00 pm (ET): San Francisco Federal Reserve Bank President Janet Yellen speaks on U.S. economic outlook in Seattle, Washington
- 4:30 pm: Money Supply
Canadian Market Calendar
- 8:30 am: Industrial capacity utilization rates
- 8:30 am: New housing price index
Earnings and the Federal Reserve
For earnings highlights, please see today's WSJ Earnings Calendar.
For a list of upcoming speeches, congressional testimony, Federal Open Market Committee material, and statistical releases, please visit the What's Next page of The Federal Reserve Board website. Recently released Federal Reserve Board material, including market moving FOMC decisions and speeches by members, will be found on their What's New page.
1 Bank of England Keeps Benchmark Rate Unchanged at 4.75 Percent
2 Ivan Devastates Grenada, Threatens Jamaica; Winds Reach 160 Mph
3 Hurricane Ivan churning toward Gulf
4 Jakarta Embassy Blast Kills Eight, Wounds Scores (Reuters) – A car bomb exploded outside the Australian embassy in Jakarta on Thursday, killing at least eight people and wounding more than 130, in an attack police blamed on al Qaeda-linked militants.
Featured setups from Wednesday’s closing data symbol scan
Jump to: Long Setups | Short Setups
Notes for the Day
Generally speaking, yesterday’s oil-sector picks which did not trigger should be moved forward on to today’s watch list (RDC, ECA and others) as the pattern in most cases has simply evolved into a 3 bar bull flag. We generally want to follow classic-looking bull flags for 2 to 4 days.
XLF financial sector ETF is in the process of making a reversal pattern (abandoned baby / potential island reversal); we’ll be looking through financial-sector stocks after the open in TrendVue Trader Talk. We should keep in mind that many market veterans keep a close eye on financials, believing that no rally is sustainable without them.
There is a great deal of news hitting the market today so lets get a feel for the open and then we’ll highlight additional trade setups in TrendVue Trader Talk.
Long Setups
General common strategy: Unless noted otherwise, buy stop just above the “high” value, with an initial protective stop at the low value of the bar, not below the bar.
Retracement or Pause in Up Swing / Up Trend
BLS – pause within still-intact upswing with a first target of 28+—buy stop 27.47, carry forward one day (move stop down just above today’s closing bar high) if the trade does not trigger.
Test of Top – Continuation
BJS – oil industry – retracement just below new 52 week high and test of top. Some are short this, but as we know, tests of top/bottom allow us to play both sides of a trade and our long entry is a buy stop 50.17 with an initial protective stop of 49.26. Since its a test, traders should move protective stops up to break-even at the earliest possible opportunity. Sometimes a big fish gets away when we apply prudent caution, but often enough, the strategy works and it does ensure we have capital left to fight another day.
Short Setups
General common strategy: Unless noted otherwise, place a sell alert at or just below the low of the setup bar, and look for the first failed intraday bounce after the low has been broken. What we are looking for is price to push down, bounce a little, and fail again – this is where we want to get short.
Test of Bottom – Continuation
AMAT – sell short alert at 15.49, after trigger is hit, locate a minor intraday bounce to short underneath. Since AMAT made an up bar yesterday of some size, if price does move down to the trigger today we would expect, and demand, to see price accelerate to the down side almost immediately, fueled by recent longs. Keep this in mind while trading – if the trade premise does not bear out, we generally want to stand aside.
KLAC and other semi-sector names have similar charts and potential. Since these are all testing bottoms (some are very messy tests indeed) we must accept that price is poised to move in either direction.
Floridians are mobilizing again, with the Keys preparing for total evacuation1 as ordered this morning. Storm track forecasters currently have the state of Florida in the middle of the storm path zone of probability, with an expected arrival on-shore late Sunday or early Monday according to early, often inaccurate, forecasts. Lets hope that the citizens of Florida are spared the worst of Ivan - they certainly need a break to re-group.
Sources:
- National Hurricane Center
- NCEP/Tropical Prediction Center
- NRL Monterey Marine Meteorology Division Tropical Cyclone Page
1 Florida Keys to be evacuated because of Hurricane Ivan
APA, XTO, ECA, TLM and others highlighted this week are all doing well and its time to move up stops on all of them – please review comments in today’s transcript. Some of these companies have no exposure to hurricanes; others (APA Apache for example) do, so do keep a watch on price.
As the storm track of Hurricane Ivan is refined we are likely to see further impacts on crude prices.
CL.C Crude Continuous contract
Oil itself has defined a range (magenta boundary) and an arguement can be made that short term support has formed around the 42.50 level, yet the sign posts of most importance are the range top and bottom.
Today's transcript.
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for Thursday September 9
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Perhaps Florida will be spared after all, although its hard to take any comfort unless Ivan diminishes in strength. Until next week, market watchers are again amateur meteorologists.
“Hurricane Ivan has caused two major refineries in the Caribbean to reduce production and could potentially disrupt U.S. Gulf Coast refining production,1”—Prudential
Indeed, the storm forecast is starting to shift west.
1 Ivan Could Be Terrible For Gulf Coast Refiners